This week, The World Economic Forum published its annual Global Risks Report. I used to look forward to it but this year made me realize that maybe it isn’t “all that.” Why? Because I now think it is something more akin to a risk popularity contest than a thoughtful risk analysis. Let me explain.
In recent years, supply chain social risks related to worker/workplace conditions, slave/forced labor, human rights violations and the like were considered major global problems affecting millions of workers. Much ink was spilled on the topic, new laws were passed (including the US Uyghur Forced Labor Prevention Act and the new German Supply Chain Due Diligence Law – about which we have a podcast) and companies spent millions developing management and oversight programs. In looking at the summary figures on pages 6 and 10 of the new Global Risks Report, there is no mention of supply chain social risks in the Top 10 or risk interconnections, nor in Figure E which presents the top 32 risks in the report.
Does this indicate that we have solved those risks – that workers far and wide in global supply chains now enjoy greatly improved lives and working conditions? Um, no. No, it doesn’t. Millions of people around the globe still face the same horrifying human rights violations and threats to their health/safety as they have in past years. Instead, it is a reflection of the current perception of risks more than the reality. In my view, this is made clear in the introduction of the report, albeit quite subtly:
“As 2023 begins, the world is facing a set of risks that feel both wholly new and eerily familiar. We have seen a return of ‘older’ risks – inflation, cost-of-living crises, trade wars, capital outflows from emerging markets, widespread social unrest, geopolitical confrontation and the spectre of nuclear warfare – which few of this generation’s business leaders and public policy-makers have experienced. These are being amplified by comparatively new developments in the global risks landscape, including unsustainable levels of debt, a new era of low growth, low global investment and de-globalization, a decline in human development after decades of progress, rapid and unconstrained development of dual-use (civilian and military) technologies, and the growing pressure of climate change impacts and ambitions in an ever- shrinking window for transition to a 1.5°C world. Together, these are converging to shape a unique, uncertain and turbulent decade to come.”
I think the lesson here is that organizations must keep their eyes on the ball that is in play for their specific situation and not get too distracted by shiny new reports. Those can sometimes be helpful in identifying newly emerging risks or offer updates to existing ones, but readers of those reports need to keep in mind that an omission of risks doesn’t inherently mean the “older” risks are gone or solved. It just means they aren’t seen as being one of the popular kids at that moment.